When it comes to saving money, it is mostly put and saved in an interest-earning saving account, which makes your investment low-risk to lose the deposit. Even though there are high risk investments, such as stocks that make high returns, they are associated with high risk. The plan and design of savings is to make your investment grow slowly while giving you a low or little risk exposure. To facilitate this “saving idea” the banking systems have evolved to provide you with online banking available with the best possible options and accessibility to the savings accounts. There are different types of accounts to choose while making your savings.
Banks and credit unions are the companies that have been found, owned and managed by the members – offering savings accounts to you. The money upto a certain level in savings accounts are insured by the Federal Deposit Insurance Corporation which is known as FDIC. The FDIC restrictions over savings accounts may include but not limited to an applicable service charge if exceeded permitted number of transactions during a permitted amount of time agreed. It is limited that the Savings accounts money is not permitted to withdraw through checks, and in some cases also not the ATM facilities permitted. Rates of interest paid to the money in savings accounts are comparatively low and higher-yielding savings accounts are provided online banking.
FDIC provides complete protection on the higher-yielding savings accounts and also the banks and credit unions provide higher interest rates to the accounts in this type comparatively to the typical standard-type savings accounts. To open a higher-yielding savings account, requires a larger initial deposit and is secured by limited access granted to the clients are the reasons why this savings method is entertained with high rates of interest. Most of the banks offer this savings method to high-value customers and to their existing and ongoing clients. There are online higher-yielding accounts on offer but for that you will need to do the set up money transfers from another bank to deposit or withdraw funds from the online higher-yielding option. An online research to find out the best online higher-yielding options, will give you the knowledge of high returns on your money as you can choose the best suitable option.
Another one good option for you would be Certificate of Deposits (CDs). This option is available to get through almost all the banks and credit unions. Certificates of Deposits are also insured by FDIC and the CDs clients are offered higher interest rates depending on the deposit amount and the period of deposit. Generally higher rates are associated with larger and longer deposits. The method of the CD is that the depositor has to keep the money in the bank or in the credit union in the form of CD for a priorly agreed period of time. If the depositor happens to withdraw money before maturity, a penalty will be assessed. As an example if you deposited $1000 with a CD for a period of 12 months, and decided to withdraw the money at the 6th month, you will be losing balance 6 months future interest from what you have already earned.
6-month, 12-month, and 60-month CD options are popular with the customers. If you wanted to further extend the period of your CD, any earned interest can be added to the CD if and whether the CD matures and is renewed. It’s worth learning how to find and open your CD option and make sure you shop around for the best CD rates to ensure you’re maximizing your savings.
Another low risk resurity investment option, the money market mutual funds are famous in the savings market today. This option is considered as one of the lowest risk types of fund investments. Even though the money market funds are FDIC-insured, it is regulated by the Securities and Exchange Commission (SEC) under the 1940’s investment company act. This option typically offers short-term interest rates to its investors.
Money market funds option is provided via mutual funds, brokerage firms, and many banks. There is no written and or guaranteed interest rate involved when you are choosing this option, therefore bit of research and self education will help you to find out about this option that has history of good performance.
Money market deposit accounts also can be given as another option offered by banks which requires a minimum initial deposit and balance, but also restricted to a limited number of transactions. Money market deposit options come insured from the FDIC. If the minimum balance is not maintained or if the minimum number of monthly transactions surpassed, penalties may be levied. The interest rates offered by this option shall be lower comparatively to the certificate of deposits but the accessibility to cash will be higher with the money market deposit accounts.
Treasuries is a common name used for the U.S. government bills or notes and the treasuries are backed by the full faith and credit of the U.S. government and that makes treasuries to be one of the most secured investment methods in the world. State and local taxes shall not be applicable on the treasuries and also are available with different maturity lengths. Treasury bills are being sold at discounted prices before the maturity. Once the bill matures, it will be worth to it’s full full face value. The difference between the purchase price and the full face value is the interest. For example, a $2000 treasury bill might be purchased for $1500; at maturity, it will be worth the full $2000 value and interest earned through this transaction will be $500.
On the other hand, treasury notes, known as T-notes are also available to interested investors and T-notes issued with maturities of 2, 3. 5. 7, and 10 years and also fixed interest rate will be paid in every six months for T-notes. If T-notes are purchased at discounted values, the notes can be cashed in for the face value at maturity. Minimum purchase value for the treasury notes and treasury bills will be $100.
Bond is another low-risk debt investment option mostly issued by companies, municipalities, States, and governments to fund projects. You will be lending money to one of these entities via purchase of bonds. The borrower known as the issuer pays an interest for the period of the bond issued and in addition to the interest paid, the issuer is also bound to return the face value of the bond to the buyer at the bond maturity. Bonds are issued at fixed interest rates for specific periods of time.
The risk associated with the bonds may vary depending on the bond type. Early withdrawals shall demand penalties or commissions depending on the terms given on each bond type. Additionally, the corporate bonds carry an extra risk, as the companies could go bankrupt.